UltraTrust Irrevocable Trust Asset Protection

Estate Planning

Estate Planning, Financial Planning

Charitable Gift Annuity: Immediate, Deferred, College, Flexible Annuity

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What is a Charitable Gift Annuity? The different types of Charitable Gift Annuities are: Immediate Annuity, Deferred Annuity, College Annuity and Flexible Annuity. Example of a how a Charitable Gift Annuity functions.   For some people, a Charitable Gift Annuity (CGA) is a convenient way to donate funds to an educational, religious or other charitable organization. A Charitable Gift Annuity works very similar to other annuities you might purchase through your insurance company, but in this case you will receive an annuity payment directly from the organization. Typically, you donate a monetary amount to the organization of your choice and then begin receiving payments either immediately or at a predetermined date in the future.   Donations to charities are subject to the charitable tax deduction, and you are entitled to make this deduction on your income tax return for each year you make a new donation. You can choose to receive your annuity payments yearly, quarterly, or monthly, although most people choose quarterly payments. Quarterly payments from a Charitable Gift Annuity are received on the last day of the quarter, not the first.   Similar to other annuity options, Charitable Gift Annuities are subject to state and federal regulations. The American Council on Gift Annuities (ACGA) sets uniform gift annuity rates for use by charitable organizations. These rates set the recommended limits for payout rates to the donor.   If a charity stays at or below these rates, they are not required to justify that their rates are within state regulatory laws. If the charity chooses rates above those set by the ACGA then an actuary is necessary to ensure compliance to the individual state laws. Rates are determined by the age of the annuitant and when the withdrawal period for the annuity begins.   A charity may spend a portion of a donation immediately but must retain enough money in its reserve to satisfy its annuity agreement with the donor. The agreement for Charitable Gift Annuities states that the annuitant will receive fixed payment amounts for their lifetime only and not an additional period of time thereafter for their beneficiaries.   This means that once an annuitant dies, payments cease and the remainder of the annuity is absorbed by the charity. The donor can opt to extend the annuity agreement to an additional annuitant, as with the joint and survivor or two lives in succession options, but the annuity payments will be split between the two individuals and will cease after both parties have died.   Different Types of Charitable Gift Annuities   Immediate Gift Annuity If you choose an Immediate Gift Annuity, payments will begin in the payment period immediately following the final contribution date. As mentioned previously, the annuitant can choose to receive payments annually, quarterly, monthly, etc. Depending on when the contribution was made, you can request your first payment to be for the full, and not prorated amount. Deferred Gift Annuity With a Deferred Gift Annuity, the annuitant is allowed to receive payments at a future date predetermined by the donor. The date chosen must be at least one year from the contribution date, but the payout schedule offers the same flexibility as the Immediate Gift Annuity. College Annuity A parent or grandparent may want to establish a college fund for a child to offset the rising cost of higher education. In this case, they would donate money for a College Annuity which will only pay out over the lifetime of the child (annuitant). Payments usually begin at age eighteen, or when the child/annuitant is old enough to attend college. The annuitant may choose payments for life or receive larger payments spread out over the number of years they attend school. Flexible Annuity A Flexible Annuity allows the annuitant to decide the starting date for payments. Usually the annuitant chooses retirement or another date of importance to begin receiving payments. Keep in mind that one factor for the annuity payment rate is age, so you will receive larger payments if you wait until you are older.   How does a Charitable Gift Annuity Work?   You may be asking how this works in a real life example. Let’s assume you just turned seventy-five and have $25,000 that you would like to donate to your alma mater as a Charitable Gift Annuity. You opt to receive immediate annuity payments on a yearly basis, and your calculated annuity rate is eight percent. Based on your annuity agreement with your alma mater, you will receive a payment for $2000 every year for the rest of your life, and an immediate tax deduction of over $9000!   This is only an estimate, and your actual deduction will vary according to changing tax laws and changing rates established by the ACGA. You should always consult with a knowledgeable financial advisor such as Estate Street Partners before donating or investing large sums of money to guarantee your rights are protected.   Read more articles on Annuities, Irrevocable Trusts & Asset Protection: Types of Annuities Annuity Payment Options: Income for Life, Joint Survivor, Annuity Cons Private Annuity Trust: Ensured Installment Sale (Structured Sale) Tax-Sheltered Annuity Frivolous Lawsuits Terri Schiavo: terminal patient Anna Nicole Dies without a Will Will Contest: What is it? Personal Injury Lawyer to Protect Assets Anna Nicole Smith’s Baby Daughter and her Will How to Hide Your Assets

Estate Planning, Financial Planning

Will Contest: What is it? How can you Protect a Will?

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What is a Charitable Gift Annuity? The different types of Charitable Gift Annuities are: Immediate Annuity, Deferred Annuity, College Annuity and Flexible Annuity. Example of a how a Charitable Gift Annuity functions.   For some people, a Charitable Gift Annuity (CGA) is a convenient way to donate funds to an educational, religious or other charitable organization. A Charitable Gift Annuity works very similar to other annuities you might purchase through your insurance company, but in this case you will receive an annuity payment directly from the organization. Typically, you donate a monetary amount to the organization of your choice and then begin receiving payments either immediately or at a predetermined date in the future.   Donations to charities are subject to the charitable tax deduction, and you are entitled to make this deduction on your income tax return for each year you make a new donation. You can choose to receive your annuity payments yearly, quarterly, or monthly, although most people choose quarterly payments. Quarterly payments from a Charitable Gift Annuity are received on the last day of the quarter, not the first.   Similar to other annuity options, Charitable Gift Annuities are subject to state and federal regulations. The American Council on Gift Annuities (ACGA) sets uniform gift annuity rates for use by charitable organizations. These rates set the recommended limits for payout rates to the donor.   If a charity stays at or below these rates, they are not required to justify that their rates are within state regulatory laws. If the charity chooses rates above those set by the ACGA then an actuary is necessary to ensure compliance to the individual state laws. Rates are determined by the age of the annuitant and when the withdrawal period for the annuity begins.   A charity may spend a portion of a donation immediately but must retain enough money in its reserve to satisfy its annuity agreement with the donor. The agreement for Charitable Gift Annuities states that the annuitant will receive fixed payment amounts for their lifetime only and not an additional period of time thereafter for their beneficiaries.   This means that once an annuitant dies, payments cease and the remainder of the annuity is absorbed by the charity. The donor can opt to extend the annuity agreement to an additional annuitant, as with the joint and survivor or two lives in succession options, but the annuity payments will be split between the two individuals and will cease after both parties have died.   Different Types of Charitable Gift Annuities   Immediate Gift Annuity If you choose an Immediate Gift Annuity, payments will begin in the payment period immediately following the final contribution date. As mentioned previously, the annuitant can choose to receive payments annually, quarterly, monthly, etc. Depending on when the contribution was made, you can request your first payment to be for the full, and not prorated amount. Deferred Gift Annuity With a Deferred Gift Annuity, the annuitant is allowed to receive payments at a future date predetermined by the donor. The date chosen must be at least one year from the contribution date, but the payout schedule offers the same flexibility as the Immediate Gift Annuity. College Annuity A parent or grandparent may want to establish a college fund for a child to offset the rising cost of higher education. In this case, they would donate money for a College Annuity which will only pay out over the lifetime of the child (annuitant). Payments usually begin at age eighteen, or when the child/annuitant is old enough to attend college. The annuitant may choose payments for life or receive larger payments spread out over the number of years they attend school. Flexible Annuity A Flexible Annuity allows the annuitant to decide the starting date for payments. Usually the annuitant chooses retirement or another date of importance to begin receiving payments. Keep in mind that one factor for the annuity payment rate is age, so you will receive larger payments if you wait until you are older.   How does a Charitable Gift Annuity Work?   You may be asking how this works in a real life example. Let’s assume you just turned seventy-five and have $25,000 that you would like to donate to your alma mater as a Charitable Gift Annuity. You opt to receive immediate annuity payments on a yearly basis, and your calculated annuity rate is eight percent. Based on your annuity agreement with your alma mater, you will receive a payment for $2000 every year for the rest of your life, and an immediate tax deduction of over $9000!   This is only an estimate, and your actual deduction will vary according to changing tax laws and changing rates established by the ACGA. You should always consult with a knowledgeable financial advisor such as Estate Street Partners before donating or investing large sums of money to guarantee your rights are protected.   Read more articles on Annuities, Irrevocable Trusts & Asset Protection: Types of Annuities Annuity Payment Options: Income for Life, Joint Survivor, Annuity Cons Private Annuity Trust: Ensured Installment Sale (Structured Sale) Tax-Sheltered Annuity Frivolous Lawsuits Terri Schiavo: terminal patient Anna Nicole Dies without a Will Will Contest: What is it? Personal Injury Lawyer to Protect Assets Anna Nicole Smith’s Baby Daughter and her Will How to Hide Your Assets

Estate Planning, Financial Planning

Financial Directive: Advanced Estate Tax Planning, Power of Attorney Issues

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Defines what is a Financial Directive and its need in advanced estate tax planning. Compare the Financial Directive with general Power of Attorney. What provisions you do not want to assign to your agent.     Watch the video on Financial Directive: Advanced Estate Tax Planning, Power of Attorney Issues   Like this video? Subscribe to our channel.   I recently wrote about the absolute need for a Medical Directive granting the “exclusive power” to your Agent for the purpose of communicating your healthcare wishes and to instruct those in charge of your medical care and to respond to the actual facts and variables known when an actual healthcare decision needs to be made. Your Medical Directive becomes effective, when:   You cannot communicate your own wishes for your medical care: Orally, In writing, or Through gestures, and You are diagnosed to be close to death from a terminal condition, or to be permanently comatose, and The medical personnel attending to your care are notified of your written directions.   What is a Financial Directive?   To summarize, a “Medical” Directive is a legal Instrument addressing the issue(s) of your healthcare and a “Financial” Directive is legal financial Instrument that empowers your Agent over all your financial matters and to exercise or perform any act under a recognized “Principal / Agent” relationship, with power, duty or right of any obligation whatsoever over everything that you now presently have or may thereafter acquire in the future, relating to any person, matter, transaction or property, real or personal, tangible or intangible, now owned by you or thereafter acquired by you, including, without limitation, general powers and specifically enumerated powers as to each possible event or circumstances.   In order for your Financial Directive to be legally binding on all third parties, the third parties so notified of your Principal/Agent relationship, your instrument must be in writing, properly witnessed or notarized with power to indemnify all those who accepted it in good faith.   Your Financial Directive should grant your Agent full power and authority to do everything necessary in exercising any of the powers as fully as you might or you could do if you were personally present, with full power of substitution or revocation, ratifying and confirming all that your Agent may lawfully do or cause to be done by virtue of your Financial Directive.   Essential Estate Tax Planning: The Financial Directive   A Financial Directive should be part of your estate tax planning.   Your Financial Directive Instrument should address the following general powers and specifically enumerate those powers as to each possible event or circumstance: Demand, receive, and obtain by litigation or otherwise, money or other thing of value to which the Principal is, may become, or claims to be entitled, and conserve, invest, disburse, or use anything so received for the purposes intended. Contract in any manner with any person, on terms agreeable to the Agent, to accomplish a purpose of a transaction, and perform, rescind, reform, release, or modify the contract or another contract made by or on behalf of the Principal. Execute, acknowledge, seal, and deliver a deed, revocation, mortgage, lease, notice, check, release, or other instrument the Agent considers desirable to accomplish a purpose of a transaction. Prosecute, defend, submit to arbitration, settle, and propose or accept a compromise with respect to a claim existing in favor of or against the Principal or intervene in litigation relating to the claim. Seek on the Principal’s behalf the assistance of a court to carry out an act authorized by your Financial Directive Instrument. Engage, compensate, and discharge an attorney, accountant, expert witness, or other assistant as it becomes necessary or relevant to principal objective(s). Keep appropriate records of each transaction, including an accounting of receipts and disbursements. Prepare, execute, and file a record, report, or other document the Agent considers desirable to safeguard or promote the Principal’ s interest under a government statute or governmental regulation. Reimburse the Agent for expenditures properly made by the Agent in exercising the powers granted by this Instrument. In general, do any other lawful act with respect to the subject at hand.   When does Your Financial Directive Become Effective?   Your Financial Directive becomes effective when you are considered disabled or incapacitated.   For purposes of your Financial Directive Instrument, “disabled or incapacitated” means when a physician certifies in writing at a date later than the date of your Instrument was executed that, based on your physician’s medical examination of you, your doctor declares you mentally incapable of managing your financial affairs.   Your Financial Directive should have a paragraph to “legally authorize your/the physician” who examines you to disclose your physical or mental condition to another person for validation. You may even authorize a second physician for a second opinion. Subsequent to this verification and disclosure of your incapacitated condition, a third party that accepts your Financial Directive is fully protected from any action taken.   Financial Directive Compared to General Power of Attorney   I am reminded of cases where the spouse is precluded to sit in important business meetings of which her temporarily incapacitated husband was a member, and decisions were being made affecting her husband’s interest in the business. While a general power of attorney may have been sufficient, but more likely would have required further court action. The Financial Directive is a significantly stronger Instrument than a general power of attorney, and would have specifically addressed issues concerning the spouse’s ability to sit and vote with the Agent, in decisions affecting the business, and more specifically her ownership interest in the business, with ability to bring in professional assistance to consult with her on such important matters.   Cautionary Provisions Within Your Financial Directive You Do Not Want to Assign to Your Agent   While we have enumerated the specifics of the powers to your Agent, there are some powers you would not want your Agent to have:   Your Agent cannot execute

Estate Planning, Medicaid

How the Advanced Medical Directive Makes Life-Saving Decisions

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How the Advanced Healthcare Directive can control your medical care to consent or refuse any medical treatment, make decisions not to resuscitate, select healthcare providers, apply for Medicaid, appoint an Agent to be guardian and provide for disposition of body.     Watch the video on How the Advanced Medical Directive Makes Life-Saving Decisions   Like this video? Subscribe to our channel.   An Advanced Medical Directive deals with life’s real issues and combats the problems that arise where most boilerplate healthcare powers of attorney, healthcare proxies, living wills and others fall short. The Terri Schiavo case is a prime example of such a problem where the power to control one’s medical condition becomes a gray realm and ends up in a myriad of appeals, numerous motions, petitions and hearings for many years in litigious battle. The result is much heartache, financial strain and most often unrealized unwanted outcomes.   What is an Advanced Healthcare Directive? Top Ten Factors for Your Medical Care   An Advanced Medical Directive is a legal written instrument signed by you and the individual you identify as your Agent to control your medical care with both signatures supervised before a notary public. Herein are the top ten reasons how an Advanced Healthcare Directive can make legal, life-saving decisions for you when you cannot. Your written instrument should contain:   Legal identity of yourself, mailing address, social security number. Legal appointment and identity of your Agent’s mailing address and social security number. Legal identity of an alternative Agent, in case where your primary Agent is unavailable, or unable to make decisions, or unwilling to make decisions. An articulated written authorization for your Agent: To consent or refuse consent to any care, treatment, service, or procedure to maintain, diagnose, or otherwise affect a physical or mental condition, including approval or disapproval of diagnostic tests, medical or surgical procedures. To request, receive, examine, copy, and consent to the disclosure of medical information or any other healthcare information. To make decisions regarding orders not to resuscitate as well as decisions to provide, withhold, or withdraw artificial nutrition and hydration, and all other forms of healthcare to keep you alive. To select and discharge health care providers, organizations, institutions and programs and to make and change healthcare choices and options relating to plans, services, and benefits. To apply for public or private healthcare programs, to include Medicare, Medicaid, and any benefits without your Agent incurring any personal financial liability. To direct that your healthcare providers and others involved in your care provide, withhold, or withdraw treatment in accordance with the limits of generally accepted healthcare standards. To decide not to prolong your life if you have an incurable and irreversible condition that will result in your death within a relatively short time, or you become unconscious and, to a reasonable degree of medical certainty, you will not regain consciousness, or the likely risks and burdens of treatment would outweigh the expected benefits. To direct treatment or withhold treatment to alleviate pain or discomfort even if it hastens your death. To the extent that your wishes are unknown to your Agent, your Agent may make all healthcare decisions in accordance with your best interest considering your personal values and other factors known by your Agent. An appointment of your Agent to become your Guardian if there’s a reason for a legal appointment of such a Guardian, together with power for the Alternative Agent to become the Guardian in cases where the primary Agent is unavailable, or unwilling to serve. A very important paragraph to negate your consent to committing you or to place you in a mental health treatment facility, or to convulsive treatment, or to psychosurgery, sterilization, or abortion. Participation or non-participation to the donation of your organs and body parts for purposes of transplant, therapy, research, or for other educational purposes. A severability clause not to void the agreement or any provisions of the agreement considered non-essential to the primary purpose and essential to the principal objective. A modification clause allowing the agreement to me modified or revoked at any time. A provision for the final disposition of your body and any funeral arrangements.   In conclusion, a Medical Directive is a morbid action to take, nobody wants to think about dying, but in this case, it could save your life.  

Asset Protection, Estate Planning, Trusts

Offshore asset protection (aka Foreign Asset Protection) for Estate Planning

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Why offshore asset protection (aka Foreign Asset Protection) is a legitimate business necessity. Discusses 1040 income tax return in regards to offshore reporting and foreign asset protection.   The U.S. Taxpayer has been intimidated by the government, accountants, and lawyers into equating offshore or foreign business asset protection as fraudulent, unlawful illicit activities and as hiding their assets, fortunes and money illegally. The foreign countries take the opposite point of view that doing business with U.S. citizens is not worth their time and effort because it subjects them to too many restrictions and over reporting to too many agencies.   For example, the United States Congress since the year 2000 has added some 20,000 pages of new tax-law regulations and increased the number of 1040 forms (individual income tax return) reporting and compliance requirement from 475 to 582. Americans spend on average 26 hours and spend in excess of $140 billion in tax preparation and compliance, each year. The laws are so complex that 60% of Americans have to hire professional help.   Foreigners avoid doing business with US citizens because they don’t want to be dragged into a myriad of compliance. Why are there so many lawyers like coffee shops around every corner?   Mention the word “Offshore” and I will lose 98% of the people. The perception of “offshore” is that it’s a less than credible type planning.   Have you noticed that no U.S.-based newspaper has any bank certificate deposit offers or information about bank certificate deposits?   There is only mention of US-based investment opportunities. So how do non-U.S. citizens make their money? Is America the only country that has and created this impeccable knowledge of business and commerce?   More to the point, nothing about foreign commerce is being taught in our colleges – nothing truly worthwhile that is of pragmatic significance anyway. In a shrinking global economy and internet-based worldwide commerce, the lack of information on international commerce is bewildering.   Even of a certain well respected business college where I’m a graduate of and where the composition of foreign students to U.S. students are about 65% from outside the United States, the professors have the word “International” on their business cards; yet when quizzed about how to conduct business in a foreign country, their stock answer is that I should consult with my accountant or lawyer. To which I respond, so you’ve never conducted business outside the U.S.? Have you ever been outside the U.S.?   So the word “International” on your business card does not refer that you’re an expert “professor” of international trade, but that you mean to refer to your business card is that you teach international students out of a textbook but without first-hand experience in international business. You guessed it. They walk away but this is true of any person who has been intimidated by the present business realm and in particular the offshore governing structures.   Offshore Asset Protection is Wicked   There seems to be a sentiment among the “international” professors that the word “offshore” is synonymous with wickedness probably propagated by the government or more due to their lack of knowledge of the complexities of offshore asset protection. It is not for the faint of heart.   Most people mistakenly believe that foreign tax planning is for the very rich. It is not only for the wealthy. As individuals become financially sound, 10% to 15% of their assets should be offshore. It’s a legitimate business necessity. In the event of catastrophic events or major calamity, whether from personal origins or business related ones, you should be able to get your hands on some cash that is outside the United States. Is it not the principle that all your eggs should not be in one basket the primary goal of sound investments?   So what’s offshore asset protection? What’s involved in it? Is offshore asset protection appropriate for everyone? What’s this intimidation factor all about?   1040 Income Tax Return Reporting in Offshore Asset Protection   The intimidation part the problem stems from the form 1040 income tax return schedule B, Line 7a where you must the check the box if at any time during the taxable year you had an interest or a signature or other authority over a financial account in a foreign country, such as a bank account, securities account, or other financial account. If the answer is yes, you have to file an additional form “TD F 90-22-1”. Answer “Yes”. Check the box. It’s not a crime to have a foreign bank account or hold foreign securities.   Link to Form 1040 Schedule B – //www.irs.gov/pub/irs-pdf/i1040sa.pdf //www.irs.gov/pub/irs-prior/f1040sab–2008.pdf Additionally question 8 of form 1040 Schedule B, asks if you received a distribution from, or were the grantor of, or a transferor to, a foreign trust. Answer is “Yes”. It’s not a crime to have a Foreign Asset Protection Trust (FAPT).   Doing Business Offshore Will Not Trigger an Audit by the IRS   It’s not a crime to do business internationally. The U.S. treasury (aka IRS) is more concerned if you do not report. Reporting business transactions is as with any US-based reporting whereby we, the taxpayers, report all income, interest, dividends and other sources of income from all sources on a worldwide basis.   Doing business internationally and checking the box on schedule B will not trigger an audit. The sole purpose of doing business internationally is to access business opportunities on a worldwide basis and bulletproof foreign asset protection or better known herein as offshore asset protection.   In the next few articles I will explore business opportunities for offshore asset protection strategies and describe Foreign Asset Protection Planning, Foreign Asset Protection Trusts, Foreign Limited Liability Companies, International Business Companies, Double Stacking Trusts, how to set-up a foreign bank account and how to make foreign investments – legally and completely compliant with the IRS.   Circular 230 disclaimer: To ensure compliance with requirements imposed by the IRS, we inform you

Estate Planning, Lawsuit

Why a Will is Not Enough to Save Anna Nicole Smith’s Baby Daughter?

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Anna Nicole Smith may have left a will but is a will truly enough to save her baby daughter and the problems that have ensued over the legal battles of her estate?   With much discomfort I have been forced to watch the Anna Nicole Smith probate proceedings and much more information than I wanted to know about Anna Nicole’s life events. Her reported death is everywhere: on TV, in print, magazines, online and everywhere else you can imagine. The media has made a circus of showing the legal battle going on in open court about the six-year-old will and interpretation thereof.     COULD YOU BE LEAVING THE SAME LEGACY AS ANNA NICOLE SMITH?   Would you want this to happen to you? The legal battles over the Anna Nicole Smith’s estate will go on for years. An unintended myriad of problems and a legacy left behind about her life living and beyond the grave.   A will does not avoid probate. A will does not eliminate the estate tax. If you die with a will or without a will your personal and real property has to go to probate. If you have property in more than one state, each states’ probate court has jurisdiction to probate the will.   What’s probate? Probate is a public process whereby a local court of jurisdiction (probate court) assumes the responsibility of determining who gets what. The court will determine the legitimacy of your will? Was it written with undue influence? Is it the last will? Who is the true executor (i.e. the person who will make the distributions under court jurisdiction)? Did it assign custody for minor children?   The probate court will take inventory of your personal and real property. In addition, the probate court will assign and investigate claims made against your property from potential and real creditors and even assign accountants and lawyers to drag the process.   SO WHY HAVE A WILL? WHAT GOOD IS A WILL?   There are two legitimate reasons for having a will. The will enables: (1) The assignment of a custodial guardian of minor children. (2) The assignment of an executor.   The assignment of choosing a guardian for your minor children is the most important aspect of having a will. Choose your custodian well, based on the love of your children as if you were going to be there. Traditionally, you would not choose the executor of your will to be the guardian of your minor children.   There’s a balance to be had between the Executor and the Guardian of your children. The Executor would have some degree of control if there were to be any uncontemplated issues, later in time. All other aspects of the will can be highly contested by anyone having an interest in the outcome of any distributions. Even a very well drafted will becomes a public document and must go to probate in each state where the decedent had property.   Anna Nicole’s will is a public document; even you can get a copy if you’re interested. Final disposition and battle over her estate is going to play before our eyes for years to come. Is this what you would want?   THINGS YOU CAN DO TO AVOID LOSING CONTROL OF YOUR ASSETS   What can you do to avoid the type of media circus over your assets? Can you avoid leaving this painful legacy? An absolute and resounding YES.   Aside from the custody of minor children, a will does not provide any type of safety net over your assets. Only a Trust will avoid this public disclosure of what should be a private matter between you and your assets you leave behind.   A Trust is a Contract. If you choose to be private about your private matter, a Trust, any Trust, will avoid probate; revocable or irrevocable, grantor or non-grantor type Trusts will avoid the probate process. A Trust is not just for the rich. Any one with $200,000 or more should have a Trust.   A perfect Trust for under $500,000 is a living Trust, or a revocable Trust to avoid the probate process. Any one with significant assets should have an Irrevocable Trust. While any Trust will avoid the probate process, only an Irrevocable Trust will avoid the probate process and avoid the inheritance tax or the estate tax.   WHAT’S THE DISTINCTION BETWEEN REVOCABLE AND IRREVOCABLE TRUSTS?   With a Revocable Trust the word “revocable” means that you have sufficient strings to revoke the contract; nullify and void it. While it will avoid going to probate and drag your dirty linen through the public process, it will not avoid the inheritance/estate tax, because on the date of your death you still owned your assets in your name.   For purposes of taxation and civil liability the “revocable” strings attached, means that you did not give up power to control and “own” on a long-term basis your assets; therefore, you are the “deemed” owner of the assets. The Estate Tax is based on what you own in your name at the date of your death. So, the Probate Process is about who gets what; the Estate Tax is about who owns what and what’s it worth for the purpose of taxation.   The estate tax is based on the “fair cash value” of your property of personal estate or real estate at the time of your death not at the time you bought it. Items that are included in your estate are cash, CD’s, real estate, investment accounts, IRA’s, vacation spot, art, jewelry, antiques, boats, planes or anything of value that could be converted to cash or near cash. Only an Irrevocable Trust avoids both the Probate Process and the Estate/Inheritance Tax.   THE IRREVOCABLE TRUST   An Irrevocable Trust is a Contract whereby you give up “any ownership claims” against your assets repositioned/transferred from you to your Irrevocable Trust. The key to dissolve your ownership claims is with

Estate Planning, Lawsuit

Anna Nicole Smith Dies Without a Will. What’s a Will? What’s a Trust?

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Without a will and a trust Anna Nicole Smith leaves behind many unsettled legal issues including paternal rights to her baby daughter.     Watch the video on Anna Nicole Smith Dies Without a Will. What’s a Will? What’s a Trust?   Like this video? Subscribe to our channel.   Subsequent to the death of Anna Nicole Smith, it’s been reported that she may not have left a will, giving rise to additional turbulent legal confusion for years to come. Without a will, Anna Nicole potentially may be leaving her baby daughter with nothing. Amongst other celebrities dying without a will, include Abraham Lincoln, Howard Hughes, Martin Luther King, Buddy Holly, Marvin Gaye, Sonny Bono, Tiny Tim, and others.   If Anna Nicole died without a will she also died leaving behind many unsettled legal issues, the paternity issue and final custody of her daughter, the unsettled case against her late husband’s estate J. Howard Marshall II (oil tycoon), and finally the country/state of court jurisdiction, Bahamas, Florida, Texas, or California.   What’s a Will? Why was a Will important for Anna Nicole Smith?   Per Consumer Reports magazine, more than 2/3 of Americans die without a will. So what’s a Will? Why is it important? And, how do you get one?   A will is your last written list of wishes effective after your death for the purpose of distributing your wealth and the conditions of which such distribution can occur. The most important part of the will is the designation of custody of minor children; (this issue alone, – the custody of Anna Nicole’s daughter would have greatly simplified at least one important piece of the legal quagmire left behind for lawyers to have a field day and possibly eat/consume a good part of her estate).   Without a will, the courts will have to determine who gets what! And, if you have property in multiple states, each state will determine the results separately through a process knows as probate.   The probate process is when the state courts will inventory the deceased person’s assets (the willed assets must be titled in the maker’s name and belong solely to the maker, or have an interest); it will gather information about claims made against the estate, investigate all claims for their validity, pay off outstanding debts, make decisions as to who gets what based on state laws where the property is located.   What happens to assets with Co-Ownerships & Joint Tenants?   Property that’s titled in “co-ownership or as joint tenants with right of survivorship” such as husband and wife, automatically goes to the co-owner’s or spouse. Similarly property that’s titled as “tenants by the entirety” immediately becomes the property of the other tenant. Property that’s owned with someone else as “tenants in common” becomes a probate asset and is distributed according to the terms of the will.   Who may create a Will?   Any person over the age of 18 may draft his own will with or without an attorney. The creator of the will is required to clearly identify himself/herself as the maker of the will, must revoke all prior wills, must state that he/she is of sound mind, must identify each item of property or personal effects, and must clearly identify each person to receive such property. If there are minor children the creator must clearly identify the person or persons to take custody of the minor children, and the creator must identify who will become the executor of his/her will after the creator’s death.   The will must be signed in front of a notary public, or in front of two “disinterested parties over the age of 18” (not family members). It’s best that the will be notarized, signed in front of a notary public which the notary will append their notary stamp on the original signature. The most common mistake is that a will is signed by family members, another common mistake is to disinherit a family member or close friend. It’s best to mention the individual by name and to give them a small amount rather than to intentionally leave them out of the will.   The excluded member may sue the estate, and therefore cause unpleasant and unwanted delays.   What happens after th Will Creator Dies?   After the date of death of the maker of the will, everything in his/her name will have to go to probate. No matter how well drafted, the will becomes the jurisdiction of the local state probate court where it becomes a “public document” whereby the will becomes available to all interested parties and creditors.   A will does not avoid the probate process. The court will determine the validity of the will instrument for such reasons as undue influence, or incapacity of the creator at the time the will was drafted, appoint an executor if one is not named, and the court will determine who is eligible to receive the property according to the state’s intestacy laws in order of blood kinship to the creator of the will.   As mentioned before, no matter how well drafted, a will must go to probate where it becomes a public document for every interested party to view and review. The only method of avoiding the probate process is to have your possessions and valuable assets titled to a Trust. All Trusts, revocable or irrevocable, grantor or non grantor -avoid Probate. A will does NOT avoid Probate. A will does NOT avoid Estate Taxes. Only an “Irrevocable Trust” avoids Estate Taxes.   One the Date of Death, Two things happne:   All assets in the decedent’s name, belonging solely to the decedent, or where the decedent had an interest, go to probate to determine who gets what. This is the Probate Process. Once all assets are probated, all assets in the name of the decedent is appraised for it’s “fair cash value” on the date of death, not when the assets were purchased, to

Estate Planning, Medicaid

Medicaid Estate Planning

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   Watch the video on Medicaid Estate Planning   Like this video? Subscribe to our channel.   For those of you not familiar with the 2005 Tax Reduction Act, some of the provisions address specific transfers by seniors under the new Medicaid nursing home provisions. Under the new provisions, before seniors qualify for Medicare assistance into a nursing home, they must spend-down their assets. These new restriction have a 5-year look-back. The look-back used to be 3 years.   By a vote of 216-214, the U.S. House of Representatives passed budget legislation that will impose punitive new restrictions on the ability of the elderly to transfer assets before qualifying for Medicaid coverage of nursing home care. Act of 2005, click on PDF: Deficit Reduction Act 2005. Search for “transfer of assets provision” in the pdf document.   What’s Medicaid?   What’s Medicaid? Medicaid is a government assistance program for people over the age of 65 or who are disabled. Medicaid assistance was designed for those who could not afford medical expenses (for the poor) but Medicaid has become the default for the middle class. The middle class has become the new poor.   Medicaid estate planning and Medicaid rules are complicated. The government is mandating a 5-year look-back on any transfers you may have made to disqualify you from entering the nursing home. Before the 2005 Tax Reduction Act it was 3 years. The transfer of any assets by the elderly has taken a notation of a “fraudulent conveyance” or in government parlance “deprivation of resources.” These new rules are spousal impoverishment programs designed to punish the healthy spouse. If one of the spouses gets sick, all resources have to be spent before you can qualify for government assistance. These new restrictive rules punish the healthy spouse leaving the healthy spouse at the mercy of welfare or her children. It’s very humiliating when seniors have planned their retirement based on their ability to keep their home.   Assets That You Must Spend Down Before You Can Qualify for Nursing Home Assistance:   ANYTHING YOU OWN IN YOUR NAME OR TOGETHER WITH YOUR SPOUSE. Cash, savings, checking, certificate of deposits, U.S. Savings bonds, credit union shares, Individual Retirement Accounts (IRA), nursing home trust funds, annuities, living revocable trust assets, any revocable Medicaid estate planning trust, real property occupied as a home, other real estate you hold as investment property or income producing property, cash surrender value of your life insurance policy, face value of your life insurance policy, household goods and effects, artwork, burial spaces, burial funds, prepaid burial if they can be canceled, motor vehicles, land contracts, life estate in real property, trailer, mobile home, business and business property, ANYTHING IN YOUR NAME OR YOUR POSESSION.   What is “Fraudulent Conveyance” in Medicaid Estate Planning?   What do you mean by “fraudulent conveyance” or “deprivation of resources”? If you give away your assets and you do not receive an equal amount (value) in return, the transfer is a deprivation of resources and you have committed a fraudulent transfer, (you give your house to your children for $100.00 when the fair cash value of your home is i.e. $150,000). If you gave your house to your children for $100 sixty months (5 years) before you entered the nursing home, you “deprived your resources” from the nursing home expenses. Unwittingly, you also incurred a gift tax on the difference between the $100.00 and the $150,000 and in addition you may have cheated the government out of Estate Taxes.   Federal Gift Tax Rules in Medicaid Asset Protection & Estate Planning:   The federal gift tax rules apply to the transfer by gift of any property. You make a gift if you give property (including money), or give the use of property, or give the income from property without expecting to receive something of at least equal value in return. If you sell something at less than its full value or if you make an interest-free or reduced-interest loan, you may be making a gift.   The general gift tax rules are that any gift is a taxable gift. However, there are many exceptions to this rule. Generally, the following gifts are not taxable gifts:   Gifts that are not more than the annual $12,000 $13,000 exclusion for the calendar year beginning in 2006 (This is called the Annual gift tax exclusion for any 12 month period, see below). Tuition or medical expenses you pay directly to a medical or educational institution for someone, Gifts to your spouse, Gifts to a political organization for its use, and Gifts to charities. Annual gift tax exclusion. A separate annual gift tax exclusion applies to each person to whom you make a gift. For 2007 2010, the annual gift tax exclusion is $12,000 $13,000. Therefore, you generally can give up to $12,000 $13,000 each to any number of people in 2007 2010 and none of the gifts will be taxable. However, gifts of future interests cannot be excluded under the annual exclusion provisions. A gift of a future interest is a gift that is limited so that its use, possession, or enjoyment will begin at some point in the future. A federal Gift Tax return is filed on form 709 for taxable gifts in excess of the annual exclusion.   Filing a Gift Tax Return:   Generally, you must file a gift tax return on Form 709 if any of the following apply:   You gave gifts to at least one person (other than your spouse) that have a fair “cash” value of more than the annual exclusion of $12,000 $13,000 for the tax year 2007 2010. You and your spouse are splitting a gift. You gave your spouse an interest in property that will be ended by some future event. Your entire interest in property, if no other interest has been transferred for less than adequate consideration (less than its fair “cash” value) or for other than a charitable use; or A qualified

Estate Planning, Wealth Management

Intro Financial Estate Planning & Wealth Preservation

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Your Successful Financial Goals is how the AFFLUENT remain affluent. They have embraced powerful “knowledge:” FINANCIAL means your present and future lifestyle.   ENGINEERING means to implement a solid legal brick and mortar foundation of “control over your wealth” not ownership.   Combined, FINANCIAL ENGINEERING means to strategically and by design, avoid frivolous lawsuits, eliminate the expensive probate process, defer (postpone) your capital gains taxes, defer, reduce, possibly eliminate taxes on your income streams and finally avoid estate taxes.   YOUR LIFE’S FINANCIAL GOALS SHOULD BE:   To become ” judgment proof ” and preserve and legally protect your wealth. To defer (postpone) your capital gains taxes [read our Vertex Trust]. [Federal 20-28%, + your state tax]. To reduce, defer or possibly eliminate your income taxes and on your “other income streams” [Federal 39.6% + your state]. To eliminate the “probate jail process.” In some states “probate jail” could take 3+ years and consume 7% to 15% of your gross estate. To eliminate ALL inheritance taxes [read our Medallion Trust®]. Federal + state can take up to 65% of your gross estate. Inheritance taxes when combined with probate costs, could consume up to 80% of your gross estate. This is the LAST letter you’ll want to write! Dear Creditor, I. M. Brooke. Successful accelerated financial estate planning and wealth preservation is based on your financial goal(s).   Asset by asset personal residence, bank account, investment account, business, other real estate, IRA, your pension)…What’s your financial goal(s)? 1, 2, 3, 4, 5, or combinations. (see above goals)   Where…. does the asset belong?   Choose the financial legal entity that best achieves your financial goal(s).   Domestic or international?   Use “good planning” NOT secrecy.   Rely on ” law ” NOT secrecy.   Successful financial estate planning and wealth preservation is a work in progress.   Financial structures are like building blocks. Add or deduct blocks as your personal and financial conditions change. Your financial planning (building blocks) must be flexible. This is “SUCCESSFUL FINANCIAL ESTATE PLANNING & WEALTH PRESERVATION.”

Estate Planning, Wealth Management

Successful Estate Planning & Wealth Preservation

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The Alternative, Uncompromising & Exclusive Estate Planning & Wealth Preservation for Your Chartered Blueprint to Accelerated Financial Success   SUCCESSFUL FINANCIAL ESTATE PLANNING & WEALTH PRESERVATION is how the AFFLUENT remain affluent. They have embraced powerful “knowledge:” You CANNOT be sued for what you don’t have.By avoiding frivolous lawsuits, you keep asset control so predator creditors and their clever money hungry lawyers cannot squeeze out of you. Deferral of taxes is postponing to your timetable. Non-Taxable is a “legal” exception or exemption. Borrowing is a “Non-Taxable” event. Control of your money & assets CANNOT be delegated to others.   Three Powerful Objectives to Successful Wealth Preservation:   Never, Never, NEVER own anything in your name, jointly with your spouse, do business as a sole proprietor, or be the general partner of a partnership. That is: FINANCIAL ENGINEERING for the preservation of your wealth, superior estate planning and “legal” protection of your assets against potential frivolous lawsuits, elimination of probate and estate death taxes. Defer your capital gains taxes by re-engineering your transaction(s). “Deferral” means “to Postpone.” Qualifying highly appreciated assets include: Stocks, bonds, real estate, sale of your business, collectibles, art, antiques, notes at least two years old, any highly appreciated asset(s) you bought for i.e. $100 now worth $1,000. By re-engineering how you do business may defer, reduce, possibly eliminate taxes on your “income streams.” Qualifying “income streams” (under certain conditions) include your salary, bonus, commissions, rental income, royalties…day-trading… Finally: tax efficient wealth transfer to your next generation.   Who is Estate Street Partners?   Estate Street Partners is a network of licensed legal, accounting, and tax experts providing dynamic, strategic, custom engineered consulting & research to complex business transactions.   As advisors, we have developed a world-wide network of hands-on / real-world strategic provider relationships.   Our operating strategy is to build and leverage our collective knowledge and resources to protect your assets from potential frivolous lawsuits, design and implement strategies to preserve your wealth by recapturing lost tax dollars, defer capital gains taxes, and reduce current taxes on your income streams; finally, eliminate probate and estate taxes.   We have asked our best clients what they want:   Assistance in making smart decisions about their money Confidentiality about their transactions Privacy Peace of mind Fresh ideas you don’t currently have; creating liquidity to your problem of wealth.

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